Food Truck Business Starter Pack: Create The Right Costing And Winning Business Plan (PART 2)
Previously, in our food truck business starter pack article, we have covered the first 5 basics to start up your food truck business. Covering everything from sorting out the legal procedure, buying the food truck, naming the business and coming up with the menu, marketing, and trademarking the business, now here comes PART 2!Shedding a more serious light, the second part will discuss further on the importance of forming the right cost calculation and creating a business plan that will work. So, here is what you need to know.
Calculate Your Cost Right
1. One Time Startup Cost
Very much like any other businesses out there, to start a food truck business, it would require a certain amount of working capital to determine the size and capacity of the business. In PART 1, we have briefly covered the cost for acquiring license and permit along with the cost to purchase a food truck. The table below shows a more detailed breakdown of the overall startup cost as underlined by SME Corporation Malaysia.
Any additional cost that might incur depending on the type of business and add-on services you offer, should also be calculated into your costing. Additionally, do note that the amount stated above is an estimate and may vary accordingly.
2. Raw Material
Running a business relating to food service means that you have to stock up your raw materials on a daily basis. The two categories constitute as raw materials would be dry (spices, rice, flour, grains, etc.) and fresh products (poultry, meat, fish, eggs, vegetables, etc.). One tip to avoid from adding up your cost is by stocking up smart. Be mindful of the validity of your raw materials especially the fresh ones. Ensure they are in good condition by monitoring the expiry dates of the products.
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3. Labor Cost
In a normal traditional brick-and-mortar setting, the cost of labor could take up a huge proportion of your budget depending on the number of staff your business needs. When it comes to food truck businesses, the number of employee is reduced down to between 2 to 5 person at a time. This is a relatively major reduction as compared to 10 - 20 employees in a sit-down establishment. Ideally, a food truck should have at least 3 operators at once to man from receiving orders and payments, preparing, and packaging the food.
4. Overhead Cost
Food truck business in comparison to a brick-and-mortar business will generally generate you a much lower overhead cost. A quick example is that you are able to eliminate from paying hefty monthly shop rental. Other than that, you are able to save in terms of electricity and water bills considering the food truck is equipped with its own generator and water tank. However, you do need to allocate your budget specifically for fuel by taking into account the consumption and distance in your daily operation.
Come Up With The Winning Business Plan
“If you fail to plan, you are planning to fail” - Benjamin Franklin
Just like what the quote says, planning is a crucial part of your business. Proper planning will not only guarantee the feasibility and sustainability of your business, but will also allow you a more organized business operation with clear direction towards achieving your end goal of becoming a profitable venture. Regardless of whether you would want to come up with an elaborated business proposal or a simple one page summary, here are the important segments that you must include:
- Business description - define the food truck industry in your region, the current outlook, and future potential, include the concept and theme, other market and industries that may affect your business.
- Market analysis - identify the market’s trend, set a target market, analyze the competition. Avoid having similar menu to a competitor operating in the same area as you.
- Organization and management - explain in details how do you plan to run your business, establish standard operating procedures, employees and their responsibilities for instance.
- Product line - list out a detailed description of your menu, ingredients, procedures, cooking and food preparation processes including the quantity intended for sale.
- Marketing plan - lay down the details of how you plan to market your food truck business. Be it online marketing such as social media, paid advertising, influencer marketing, etc. or offline marketing such as flyers, radio commercial, etc., include all into your business plan.
- Funding request and proposal - for this, you need to clarify how much funding you need to start your food truck business and exactly how you plan to have it funded. Let's say, you decided to get a business loan or a government/private sponsored fund, specify the exact amount you want to borrow or request.
- Financial projection - create a breakdown of your predicted expenses and profits and losses for your first 3 years.
Again, a strong foundation is important for any businesses, that is why a well thought out business plan is essential. Other than that, a good business plan that is properly done will also create a better impression towards your potential investors and sponsors. Final Thought Concluding both Part 1 and 2 of the food truck starter pack article, we hope you have a better picture on how to delve into the food truck business. Once all these aspects are covered, do find your stocks on Dropee and get them at wholesale prices today!